Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) Analysts Just Trimmed Their Revenue Forecasts By 11%
One thing we could say about the analysts on Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well. Surprisingly the share price has been buoyant, rising 17% to US$5.60 in the past 7 days. With such a sharp increase, it seems brokers may have seen something that is not yet being priced in by the wider market.
After the downgrade, the seven analysts covering Recursion Pharmaceuticals are now predicting revenues of US$56m in 2023. If met, this would reflect a huge 40% improvement in sales compared to the last 12 months. Losses are expected to increase slightly, to US$1.35 per share. However, before this estimates update, the consensus had been expecting revenues of US$63m and US$1.32 per share in losses. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to this year's revenue estimates, while at the same time holding losses per share steady.
See our latest analysis for Recursion Pharmaceuticals
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Recursion Pharmaceuticals' revenue growth is expected to slow, with the forecast 57% annualised growth rate until the end of 2023 being well below the historical 78% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 17% annually. Even after the forecast slowdown in growth, it seems obvious that Recursion Pharmaceuticals is also expected to grow faster than the wider industry.
The Bottom Line
Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Recursion Pharmaceuticals after today.
After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Recursion Pharmaceuticals' business, like dilutive stock issuance over the past year. Learn more, and discover the 3 other flags we've identified, for free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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